Is Passive Income Just Make Believe?

Passive income seems to be the holy grail of income. It’s basically getting paid for doing nothing. The money just keeps on flowing. Pretty sweet, eh? Is it attainable? You bet! And actually, you’ll achieve this level of success someday. I can almost guarantee it.

Passive income is really what everyone is reaching for. That’s what retirement is. It’s the point in your life where passive income can take over as your stream of income. No more work. So really, making passive income is really all that impressive.

But you’re not reading this because you want to retire at 65 and live an okay life. No, you’re reading this because you want to make lots of money without doing lots of work. Some would scold you for that attitude. I, however, applaud you. After all, if you want money, your goal should be making the most money possible whilst doing the least amount of work. That just good math.

So no, passive income isn’t just make believe. It’s real. And it’s more prevalent today than ever before thanks to the internet. There’s a saying… money never sleeps. Well neither does your website, real estate or product or whatever else you setup to run by itself. It’s fantastic.

Before you get too excited about making money in your sleep, know that there’s a very active part to passive income. Yes, in order to create passive income you must first work your tail off. You must work and save very, very hard. During which time, you don’t know if passive income will really be a result. Anything can happen. Perhaps the money you’ve poured into a business will be gone. If that would happen, attaining passive income will be more out of reach than ever before. That’s why you must do your homework, put in the hours and make good choices.

Something else to consider is that you can almost always work harder to create more passive income. So just because you’re receiving some passive income, doesn’t mean that’s good enough or fulfilling enough. Nope. Once you begin getting passive income, you’ll likely want more and more of it. This means generating more active income. Passive income usually bolsters a person’s income. Not until retirement does a person say, “You know what… my passive money is good enough. I think I’ll stop now.”

No. Passive income is not a myth. But it probably won’t be as satisfying as you may think. You’ll still want to work – to achieve something in life. So know that passive income isn’t’ the end – unless you really want to retire.

A few early retiree bloggers have pointed this out to me. They say once you retire, it’s almost as if a sign has been placed around your neck saying, “I’m free, hire me.” All the sudden, money becomes attracted to you. Your friend needs a house sitter. Someone wants help designing a website. You feel like making your house an Airbnb. Your hammock will get lonely. But again, passive income is very desireable.

How to Get Started Building Passive Income

I started building passive income by investing in the stock market. This creates passive income in a variety of ways. First, I get dividend income. Second, the stock itself goes up over time.

It’s this very model that makes people wealthy. Whenever you buy an investment, it should be an income producing asset. Investing in something that may go up in value is not good enough. It should also giving you a return prior to selling. It’s brilliant. It’s getting income on one asset in multiple ways – one in the short-term, one in the long-term. The legendary investor Warren Buffett preaches the same approach.

Luckily, this is true of many approaches. If investing in the stock market isn’t your thing, consider investing in real estate. The value of the property will likely rise over time. You will also earn an income from the tenants.

Know What Passive Income Is Not

Passive income is brilliant and you should go after it. Although I want to warn you of a few things so you don’t jump in and get disappointed.

Passive income is NOT easy and it takes a lot of work. Nothing worth having is easy, right? It’s the same with passive income. To get passive income flowing in, there are a lot of other things that must fall into place. For an example, let’s say you want passive income from a website. Let’s say you want $200 per day from a site. This will take the place of your day job.

Getting $200 in passive income is very possible. But it takes a lot of work to get there. You have to know tons of things. Knowing these things will likely take you years to master. This is everything from search engine optimization to a blog layout that is beautiful yet fast loading. Balancing technology and audience takes a long time to master. Sure, you can get a WordPress site live within minutes but making it good will take months – at least.

You now know what passive income is, how awesome it can be and what it is not. If you still wish to move forward (you should) get started ASAP. Have fun!

Bio:

Will Lipovsky is a personal finance freelance writer and internet marketer. His most embarrassing moment has been saying to a Microsoft executive, “I’ll just Google it.” You can get in touch with Will at FirstQuarterFinance.com.

Lovely comments

Lots of truth here. Now that I started blogging a few months ago, I have started making a small amount of passive income with ads on my blog. But these ads wouldn’t make me any money if I wasn’t working my tail off and getting traffic to my blog. Passive income is the ultimate goal for many, but you’re basically working for free for a long time before you get there. It will be worth it in the end! Great post!Rachel @ The Latte Budget recently posted..5 Ways to Be Productive While Commuting

I also make passive income from stock market investing. One thing to add to the above analysis is that if you want to invest in the stock market (or real estate) you need to start with money to invest.

For example if you believe you could earn 6% a year from stock markets (which would be very good in an environment of low interest rates) then you would need £100,000 invested just to get £6,000 a year. That is assuming you have built up this amount over several years in a tax-free account such as an ISA. Otherwise it will be less due to taxes.

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